Andrew and I have a story coming out later today on the whole brouhaha around AEI allegedly offering scientists $10,000 to undermine the IPCC report (turns out there’s a lot more smoke than fire). In the process of putting it together we’ve been in email contact with Steve Hayward at AEI. In passing, he said something about a carbon tax that strikes me as highly relevant to the ongoing debate here on Gristmill:
The inside word from Capitol Hill is not to expect any climate legislation this year or next; the Democratic leadership would rather wait for Hillary or her alternative in the White House. But dig a little deeper and you will find that the sentiment that led to the Byrd-Hagel resolution in 1997 is still largely in place: there simply isn’t the political will, even among Democrats, to do emissions cuts that will inconvenience or cost anyone in a serious way, which is why any cap and trade proposal that gets through will have all kinds of cross-subsidies for favored industries and constituencies, along with a "safety valve" price ceiling that will further reduce the effect of any such program. I am confident that environmentalists will be very dissatisfied with the outcome five or ten years from now. We don’t like this scene because we think you get the worst of all worlds — a massive scheme of bureaucratic regulation and industry rent-seeking, but with little of the actual results of, say, the Clean Air Act. This is one reason why more and more of us at AEI are increasingly favorable to a straight-up carbon tax. I haven’t declaimed publicly on the subject yet (though I have been talking up the idea for months, generating fierce scowls in a conversation with my CEI pals), but five other AEI fellows have so far, along with the book we published in November. The problem with a carbon tax, aside from the partisan politics (both parties are scared of the T-word for the usual reasons) is that the public will not support a carbon tax high enough even to reach Kyoto targets. So other things need to be considered. (I’ll add here that I like a carbon tax more for energy diversification reasons than for climate, but it would be a twofer.)
